Silver prices reached a new record high of $82.00 per troy ounce, boosting focus on Hindustan Construction Company , one of the world's top five silver producers with 800-tonne annual capacity.

Silver prices extended their remarkable rally, clinching a fresh record high of $82.00 per troy ounce before paring gains to around the $80.00 level. The surge has been driven by multiple factors including low supply, rising demand, and an easing monetary policy cycle by central banks, putting Hindustan Construction Company shares in focus for trading.

Strong Silver Exposure Drives Focus

Hindustan Construction Company stands among the world's top five silver producers, with an annual capacity of around 800 tonnes. The precious metal serves as a meaningful profit driver for the company, contributing nearly 38% of its EBIT. This significant exposure positions the company as a direct beneficiary of the current silver price rally.

Brokerage Outlook and Stock Performance

Jefferies initiated coverage on Hindustan Construction Company with a Buy rating and a target price of ₹660, implying approximately 4% upside from current levels. The brokerage sees the company as a clear beneficiary of higher silver and zinc prices, aided by its first-decile zinc mining costs.

The stock has already delivered impressive returns, rising 44% in the year to date and 28% over the past month. Despite trading at 9.20x FY27E EV/EBITDA—above its long-term average of 7.30x—Jefferies believes the premium is warranted given silver's rising share in overall profitability.

Earnings Growth Projections

While volume growth is expected to remain modest, earnings momentum is set to stay strong. Jefferies projects EPS growth of 22% in FY26 and 29% in FY27, followed by another 7% increase in FY28. This outlook is underpinned by robust cash generation and healthy return ratios, with FY26–28 EPS estimates placed 9–31% above broader Street forecasts.

Silver prices have surged 172% to around $82.00 at spot, while Hindustan Construction Company expects the global silver market to remain in deficit. The company has assumed silver prices of $56.00–60.00 for 2HFY26–FY28, approximately 3–10% below prevailing spot levels.

Cost Efficiency Improvements

Cost efficiency has improved meaningfully across operations. Zinc cost of production (excluding royalty) has fallen from a peak of $1,257 in FY23 to $1,002 in 1HFY26. This improvement has been driven by several factors:

• Better ore grades
• Increased use of domestic coal
• Softer international coal prices
• Growing share of renewable energy

Looking ahead, costs are expected to remain largely stable over FY26–28E, as continued efficiency gains and higher renewable power usage are likely to offset the impact of deeper mining operations and fluctuations in ore quality.

With nearly 37% of its 2HFY26 silver volumes hedged at $37.00, most of the upside from higher prices is likely to flow through in FY27, delivering a meaningful boost to EBITDA.

Hindustan Construction Company has successfully completed its rights issue with an exceptional response from investors, achieving a subscription rate of 200%. The infrastructure company's capital raising initiative has garnered significant market interest, reflecting strong investor confidence in its growth prospects.

Rights Issue Performance Overview

The rights issue demonstrated remarkable market appeal, with investor applications substantially exceeding the company's expectations. The overwhelming response indicates robust market sentiment towards the infrastructure sector and Hindustan Construction Company's strategic positioning.

Management Commentary and Strategic Impact

Commenting on the successful completion of the rights issue, Mr. Arjun Dhawan, Vice Chairman Managing Director, expressed gratitude to shareholders for their continued support. He emphasized that the response to the rights issue strengthens the company's balance sheet while supporting ongoing deleveraging and long-term growth strategy.

The company has retained proceeds equivalent to the issue size, with the balance amount to be refunded to investors in accordance with applicable regulations. Equity shares will be allotted to eligible applicants based on the allotment criteria finalized in consultation with the designated stock exchange.

Equity Structure Transformation

The successful completion of this rights issue will result in a significant expansion of the company's equity base. The substantial increase in share capital is expected to strengthen Hindustan Construction Company's financial foundation and provide additional resources for business operations and growth initiatives.

Market Response and Investor Confidence

The 200% subscription rate reflects strong investor confidence in Hindustan Construction Company's business model and future prospects. The infrastructure sector has been witnessing renewed interest from investors, and this rights issue success demonstrates the market's positive outlook towards established players in the construction and infrastructure development space.

The significant oversubscription also indicates that investors view the company's plans favorably and are willing to participate in its growth journey. This capital infusion is expected to provide Hindustan Construction Company with enhanced financial flexibility to pursue strategic initiatives and strengthen its market position in the infrastructure development sector.